J.M. Smucker Co. took $1 billion in impairment charges in its fiscal third quarter to write down the value of its underperforming Hostess Brands acquisition. The charges created a $594 million loss for the quarter ending Jan. 31 (Smucker’s fiscal year ends April 30).
That’s about 18% of the price Smucker agreed to pay for Hostess in late 2023 ($5.6 billion).
The charges included $794 million related to the goodwill of the Sweet Baked Snacks reporting unit and $208 million related to the Hostess brand’s trademark. Sales in the new Sweet Baked Snacks business unit, which Hostess anchors, declined 7% in the quarter to $279 million.
Company-wide sales dipped 2% in the third quarter to $2.186 billion, although through nine months they’re running 10% above 2024’s figure (this year $6.582 billion); however, 2024 did not include the large Hostess acquisition, which added about $1.4 billion in sales to Smucker.
“The decrease in comparable net sales reflects a 5 percentage point decrease from volume/mix, primarily driver by decreases for coffee, dog snacks and lower contract manufacturing sales related to the divested pet food brands,” the company wrote in the third-quarter report, posted Feb. 27.
As a result, Smucker the same day replaced Dan O’Leary, senior vice president and general manager of Sweet Baked Snacks and Pet, with Judd Freitag, effective March 7. O’Leary came with the Hostess purchase, having served as its chief growth officer. Freitag was vice president and general manager and marketing for the Smucker’s Pet Foods segment.
